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Budgeting Insights From the Q2 2023 IPA Bellwether Report

The Q2 2023 IPA Bellwether Report offers valuable insights into today’s marketing landscape. In essence, total marketing budgets have experienced upward revisions, which is a trend that has been ongoing for the past two years.

However, amidst persistent inflationary pressures, interest rate hikes and economic uncertainties, some companies have scaled back their spending slightly. Let’s dissect what it means for businesses like yours going forward.

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Growth in Total Marketing Budgets

During the second quarter of 2023, just over 20% of survey respondents reported growth in total marketing spend. This positive trend outpaced the 14.4% who implemented budget cuts, resulting in a modest net balance of +6.4%. While this represents a slight softening in budget growth compared to the previous quarter (+8.2% in Q1), it’s still a favourable indicator.

Categories Driving Budget Growth

The report categorises marketing activities into seven segments, each with its own story to tell:

  • Sales Promotions: The star performer, with a net balance of +13.4% in budget expansion, up from +8.8% in Q1. This robust growth suggests that companies are proactively supporting their customers through the cost-of-living crisis, making sales promotions a key focus for marketeers.
  • Events: Another area of growth, with a net balance of +9.8% (up from +6.3%). This indicates that the appetite for face-to-face meetings and in-person engagements continues to drive spending in this category.
  • Direct Marketing: This segment saw sharp expansion, with a net balance of +7.3% (up from +4.2%). The growth here is the most significant since the third quarter of 2006, highlighting its continued relevance in the digital marketing mix.

Categories Seeing Budget Reduction

While these categories experienced growth, others saw a reduction in their budget: 

  • PR: The cut to PR budgets was more pronounced, with a net balance of -1.9% (from -0.6%).
  • Market Research: Although still negative, the decline in market research budgets softened slightly to a net balance of -2.9% (from -3.2%).
  • Main Media: Notably, marketing budgets in the main media segment decreased for the first time since Q3 2022. This shift suggests a reaction to the changing economic climate. However, within this category, some areas continued to grow such as ‘other online’ and ‘video’. However, ‘audio’, ‘out of home’, and ‘published brands’ experienced declines.
  • Other Marketing Activity: A net balance of -6.8% (from -5.8%) reflects a decrease in spending in this unspecified category.

Economic Sentiment and Projections

The report also delves into the sentiment among UK companies regarding their financial prospects. The results indicate a more somber mood: 

  • Industry-Wide Financial Prospects: Sentiment towards the industry’s financial prospects took a negative turn, with a net balance of -12.6%. This shift is attributed to further interest rate hikes and persistently high inflation rates.
  • Own-Company Financial Prospects: Optimism about own-company financial prospects declined, with a net balance of +2.6% (down from +7.0% in Q1). Nearly half of the respondents (48.4%) reported no change in their outlook.

Ad Spend Projections

The Bellwether Report provides insights into ad spend projections, which have a direct impact on digital marketing budgets: 

  • 2023: Despite economic challenges, S&P Global report that they’ve upgraded their GDP forecast for 2023 to grow by 0.3%. As a result, the report predicts a marginal decline in ad spend by -0.6% (compared to -0.9% previously).
  • 2024: Ad spend is expected to remain flat with a growth forecast of 0.1%, as higher interest rates start to affect household and business budgets.
  • 2025 and Beyond: More positive news emerges for 2025 and beyond, with anticipated growth rates of 1.5%, 2.0%, and 2.1% in 2025, 2026, and 2027, respectively.

Implications for Digital Marketing

Now that we’ve explored the key findings of the report, let’s consider the implications for digital marketing strategies: 

  • Focus on Sales Promotions: With a record increase in sales promotion budgets, businesses should consider placing a stronger emphasis on this area of marketing. Crafting creative and impactful digital promotions can help brands connect with cost-conscious consumers.
  • Leverage Events: The appetite for in-person events remains strong. Digital marketers should continue to harness the power of virtual and hybrid events to engage audiences.
  • Direct Marketing Opportunities: As direct marketing budgets grow, businesses should explore personalised and data-driven strategies to connect with their target audience. After all, Gitnux report that targeted advertising can increase CTRs by 670%, ‘with 80% of users favouring tailored ads.’
  • Budget Reallocation: In light of the decline in main media budgets, businesses may need to reallocate resources to other online and video channels to maintain their digital presence.
  • Stay Adaptable: Economic uncertainties mean that marketing strategies should remain agile and adaptable. Regularly assess and adjust your digital marketing campaigns to align with changing consumer sentiment.

To Sum Up

In short, the Bellwether Report provides valuable insights into the state of marketing budgets and economic sentiment in the UK. While challenges persist due to inflation and interest rate hikes (the current rate has increased to 5.25% in the UK), there are opportunities for businesses, especially in the areas of sales promotions, events and direct marketing. Staying adaptable and responsive to changing economic conditions will be key for digital marketers looking to navigate the evolving landscape.

As digital marketing experts, Saturate can help businesses like yours to leverage these insights, make informed decisions and refine your digital marketing strategies in the coming quarters. Take advantage of our wide range of award-winning digital markers services now and start gaining the upper hand over your competitors. Get in touch now.

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